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Protecting Employers for Over 30 Years
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St. Charles, IL Chicago, IL Office Davenport, IA Office Minneapolis, MN Office Milwaukee, WI Office
St. Charles, IL Chicago, IL Office Davenport, IA Office Minneapolis, MN Office Milwaukee, WI Office

Arbitration Archives

Ongoing Saga - Class Action Waivers

Since 2012, there has been an ongoing saga created by the National Labor Relations Board (NLRB) as to whether or not an Employer can require its Employees, as a Condition of Employment, to agree to arbitrate all Legal Claims against the Employer on an individual basis only, thereby waiving Class and Collective Action Procedures. The NLRB initially took issue with this type of action in the D.R. Horton, Inc. Case., 357 NLRB No. 184 (2012), in which it held that requiring Employees to waive the right to bring Claims in the form of a Class Action (or a Collective Action under the Fair Labor Standards Act) violated the guarantee of rights, as provided in Section 7 of the National Labor Relations Act, that allows Employees the right to engage in "protected concerted activity for mutual aid or protection". When that Case was appealed to the Fifth Circuit Court of Appeals, the Fifth Circuit denied enforcement of the Board's Order in the D.R. Horton, Inc. Case. Subsequently, the NLRB issued another Decision with a different Employer (Murphy Oil USA, Inc., 361 NLRB No. 72 (2014)) reaching the exact same results - that Class Waivers in Arbitration Agreements, as a Condition of Employment, unlawfully interfered with Employees' rights to engage in "protected and concerted activity" under the National Labor Relations Act. That ruling was again rejected by the Fifth Circuit on Appeal.

Class Action Waiver Clauses in Arbitration Agreements Face Further Scrutiny

Arbitration agreements are a common tool many employers use as an alternative to going to court to resolve disputes with their employees. Arbitration has the potential to be a faster, cheaper, and more private way to resolve disputes, with more finality. One of the biggest advantages many employers see in arbitration is the ability to resolve disputes individually rather than as part of a class action. However, the NLRB has determined that, in its opinion, these waivers violate employees' right under federal labor law to engage in "concerted activities" for their "mutual aid or protection." This has caused uncertainty as to the legality of such class action waivers in arbitration agreements in the employment arena.

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